Canadian Dollar: Risks skewed higher against US Dollar – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is a mild outperformer versus the US Dollar (USD), supported by firmer Oil, even as USD/CAD trades about one standard deviation above their fair value estimate. Softer Canadian jobs data contrast with strong wage growth, leaving Bank of Canada (BoC) tightening expectations unchanged. Technically, they see recent gains stalling below resistance and highlight nearby support levels.

CAD steadies as USD/CAD rally stalls

"The CAD is a minor outperformer against the USD on the session by virtue of holding unchanged on the session, with the aid of firmer oil prices. Spot remains about one standard deviation above our fair value estimate (1.3544) this morning, however."

"Canadian jobs data Friday were soft—a drop in jobs, driven by full-time losses, and a rise in the unemployment rate. Hours worked were flat in April, suggesting a sluggish start to Q2 from an activity point of view."

"However, wage gains (4.8%) were stronger than forecast and continue to run well above inflation; with policymakers sensitive to inflation risks, strong wage growth meant that OIS continued to price in around 40bps of tightening by year-end, unchanged from just before the jobs data."

"Despite USD/CAD’s grind higher last week taking out resistance in the low/mid 1.36 zone, gains appear to have peaked around 1.3710/20 resistance that capped rebounds over the past month. The USD’s push higher has turned short-term trend momentum neutral but daily and weekly DMIs are still firmly in USD-negative territory which should help curb gains. "

"A clear push through 1.3720 may see USD gains extend to 1.3750/00. Support is 1.3640/45 and 1.3550/75."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.